Penalty limitation under the Income-tax Act: order quashed as the six-month statutory period was not met.

Penalty under section 271DA was held time-barred because the penalty proceedings were initiated in the assessment order dated 21.12.2020, but the penalty order was passed only on 26.07.2023. On these admitted facts, the six-month limitation period under section 275(1)(c), running from the end of the month in which penalty action is initiated, was not complied with. The limitation objection was accepted and the penalty order was quashed in favour of the assessee.

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Issues: Whether the penalty imposed under section 271DA of the Income-tax Act, 1961 was barred by limitation under section 275(1)(c) of the Income-tax Act, 1961.

Analysis: The penalty proceedings had been initiated in the assessment order dated 21.12.2020, while the penalty order was passed on 26.07.2023. On these admitted facts, the statutory requirement that the order be passed within six months from the end of the month in which action for imposition of penalty is initiated was not satisfied. The limitation objection was therefore accepted.

Conclusion: The penalty order was held to be time-barred and was quashed in favour of the assessee.

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